The 401k Scheme - - - Government to Confiscate?

[blackjack]

http://www.youtube.com/watch?v=2YHb3t70TR0

[warfreak2]

Shame and comedy?

[Cromacster]

I hear the government is going to round up all the newborns and raise them in state run orphanages too.  Watch out!

[KBecks]

I think it is wise to keep some $$ in a non-retirement account.  I try not to be paranoid about it, though. 

[Cyrano]

If you are worried about confiscation, all accounts, retirement and otherwise, are at risk, and you should be stashing wealth under your mattress or overseas.

[matchewed]

Repeat after me. "I will not be a slave to fear mongering. It is stupid and a waste of my time. Unsubstantiated claims are nothing more than air and worse than garbage. At least garbage can be eaten by bacteria."

[DrTesla]

Here is an interesting article that ends up rallying for the saver/investor..

http://online.wsj.com/news/articles/SB10001424127887324050304578412932073225110

[La Bibliotecaria Feroz]

Here is an interesting article that ends up rallying for the saver/investor..

http://online.wsj.com/news/articles/SB10001424127887324050304578412932073225110

I read that article and it annoyed the snot out of me. Why shouldn't the government cap the total balance in tax-advantaged retirement accounts? Already, you're only allowed to put in a certain amount per year; this seems like just an extension of that. The author makes it sound like the government hates rich people. It's not telling people not to save more than $3 million; it's just saying that MAYBE, once you reach that balance, the government will no longer PAY YOU to save by giving you tax breaks. The intention of the 401(k) tax advantage is to encourage people to save enough for retirement, not to encourage people to save enough to retire on a yacht.

I'm open to other points of view on this. The writer of the article pushed my buttons with his poor-rich-people-being-persecuted attitude.

[gillstone]

Here is an interesting article that ends up rallying for the saver/investor..

http://online.wsj.com/news/articles/SB10001424127887324050304578412932073225110

I read that article and it annoyed the snot out of me. Why shouldn't the government cap the total balance in tax-advantaged retirement accounts? Already, you're only allowed to put in a certain amount per year; this seems like just an extension of that. The author makes it sound like the government hates rich people. It's not telling people not to save more than $3 million; it's just saying that MAYBE, once you reach that balance, the government will no longer PAY YOU to save by giving you tax breaks. The intention of the 401(k) tax advantage is to encourage people to save enough for retirement, not to encourage people to save enough to retire on a yacht.

I'm open to other points of view on this. The writer of the article pushed my buttons with his poor-rich-people-being-persecuted attitude.

+1

How many times do we have to hear another paranoid delusion that never comes true before we wise up and stop making tin foil hats.

[innerscorecard]

If this comes true, I think it would be unfair and would be against it on principle.

...but I don't expect to be hurt personally, and I think neither should most Mustachians. I think this demonstrates another positive for the Mustachian attitude - it is better to say "enough" when you have enough (~$1 million including house for most people, going on the MMM model). It's tax-friendly (you will be paying pretty much nothing once you FIRE on this amount due to the 0% taxes on long-term capital gains and qualified dividends when you don't have much earned income) and keeps you low-profile, not just from ordinary thieves, but also from the government.

[Hamster]

I hear the government is going to round up all the newborns and raise them in state run orphanages too.  Watch out!

Very timely - just put sheeps' blood on your door frame. Your children should be fine. 

[MDM]

...it's just saying that MAYBE, once you reach that balance, the government will no longer PAY YOU to save by giving you tax breaks.
...
I'm open to other points of view on this. The writer of the article pushed my buttons with his poor-rich-people-being-persecuted attitude.

Absent deficit spending, the government can only pay you by getting money from others via the taxes and fees it collects.  Unless you mean "the government will no longer [let you keep the money you have earned] by [not taxing you]" - that would leave others out of it.

[hodedofome]

If you read this http://www.amazon.com/Capital-Twenty-First-Century-Thomas-Piketty/dp/067443000X/ref=sr_1_1?ie=UTF8&qid=1397236247&sr=8-1&keywords=capital+in+the+twenty-first+century it's fairly clear that the return on capital is better than the rate of growth for the general economy. Therefore, we'll see a natural expansion of the wealth gap in the world. The wealthy have money to invest, the poor do not.

I believe this book/idea is going to be pretty influential in the future. The solution the author proposes is a global wealth tax. Whether that will affect plain jane retirement accounts, who knows. But I won't be surprised by more taxes on the rich, whatever we define that to be.

[AJ]

Here is an interesting article that ends up rallying for the saver/investor..

http://online.wsj.com/news/articles/SB10001424127887324050304578412932073225110

I read that article and it annoyed the snot out of me. Why shouldn't the government cap the total balance in tax-advantaged retirement accounts? Already, you're only allowed to put in a certain amount per year; this seems like just an extension of that. The author makes it sound like the government hates rich people. It's not telling people not to save more than $3 million; it's just saying that MAYBE, once you reach that balance, the government will no longer PAY YOU to save by giving you tax breaks. The intention of the 401(k) tax advantage is to encourage people to save enough for retirement, not to encourage people to save enough to retire on a yacht.

I'm open to other points of view on this. The writer of the article pushed my buttons with his poor-rich-people-being-persecuted attitude.

I guess I don't really see the point of such a cap. For traditional IRAs/401ks, the money will be taxed eventually. I could almost see the point for Roths (since the gains are never taxed), but then if we're trying to target the very rich they probably aren't contributing to a Roth anyway. It seems like this wouldn't target the very rich, because of the annual contribution limit, but rather would target those in their 50s/60s who have spent their whole lives maxing out the accounts. $3 million is hardly obscene wealth for folks that have been diligent lifetime savers.

[Hamster]

I guess I don't really see the point of such a cap. For traditional IRAs/401ks, the money will be taxed eventually. I could almost see the point for Roths (since the gains are never taxed), but then if we're trying to target the very rich they probably aren't contributing to a Roth anyway. It seems like this wouldn't target the very rich, because of the annual contribution limit, but rather would target those in their 50s/60s who have spent their whole lives maxing out the accounts. $3 million is hardly obscene wealth for folks that have been diligent lifetime savers.

It's not really about whether $3 million is obscene wealth. It's about whether the government (i.e. all other taxpayers) should continue to subsidize your savings once you get beyond a certain point of wealth. If you have $3 million in retirement accounts, you've already received plenty of tax subsidies/deferment. Why would you need or deserve more?

[FIPurpose]

Yes but if the accounts are tax deferred, then the money will eventually be taxed. It's not much of a subsidy.

A subsidy would be the removal of taxes, 401ks are just deferments.

[Hamster]

Yes but if the accounts are tax deferred, then the money will eventually be taxed. It's not much of a subsidy.

A subsidy would be the removal of taxes, 401ks are just deferments.

A lot of the early retirees around here plan to keep withdrawals low enough that they never pay taxes on the withdrawals either. Even if that weren't the case, deferment is still a subsidy due to inflation and time/value if money. If you don't feel that's the case, I'd be happy to take a zero interest loan from you for the next 30 years.